U.S. trade gap narrows unexpectedly in February

Crude-oil imports lowest since March 1996

WASHINGTON (MarketWatch) — Strong production of oil and natural gas in the United States helped push the U.S. trade deficit down in February.

The nation’s trade deficit narrowed 3.4% in February to $43.0 billion from $44.5 billion in January, as the U.S. imported the lowest amount of crude oil in 16 years, the Commerce Department said Friday.

The trade deficit has been volatile in recent months, mostly due to swings in oil.

The U.S. petroleum deficit narrowed sharply in December, then rebounded in January. It retreated again in February, as the quantity of U.S. oil imports dropped to the lowest level since March 1996.

The U.S. has been producing more oil and natural gas through new techniques such as fracking. Exports of U.S. petroleum products rose in February.

Reuters

An oil tanker pulls into the port of a Repsol oil refinery in Cartagena, eastern Spain February 15, 2012.

As a result, the petroleum deficit narrowed 12.8% in February to $21.2 billion.

As a result of the improvement, the trade gap may have little impact on first-quarter growth. This could push economists’ estimates of first-quarter growth even higher; prior to the report, they were generally expecting trade to make a slight negative contribution to growth in the first three months of the year.

Estimates of first-quarter growth are now well above a 3% annual rate. The economy grew at a slim 0.4% rate in the fourth quarter.

Details

In February, exports rose 0.8% to $186.0 billion, reversing a 1.2% drop in the prior month.

The gain was led by exports of industrial supplies, including fuel oil, and autos. Exports of civilian aircraft declined in the month. Imports were virtually unchanged at $228.9 billion, after a 1.8% rise in January.

The value of U.S. crude-oil imports fell to $19.65 billion in February from $24.53 billion in January. The quantity of crude imports fell to 204.8 million barrels. The price of a barrel of oil rose to $95.96 from $94.08 in the previous month.

The U.S. trade deficit with China widened to $23.4 billion in February compared with $19.4 billion in the same month last year. The deficit is lower than the $27.8 billion gap in January.

For all of 2012, the U.S. deficit with China was $315.1 billion, the largest imbalance ever recorded with a single country.

The weak economy in Europe continues to weigh on U.S. trade. Exports to the euro area are down 5.6% year-to-date compared with the first two months of 2012.

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